M&M Financial Services Q1 Review: Provisions Spark Brokerages’ Concern
Mahindra & Mahindra Financial Services Ltd., a non-banking financial company (NBFC), has reported its results for the first quarter of the financial year ending March 2026. The Mumbai-based company’s standalone net profit rose 3.2% to Rs 530 crore, missing estimates from brokerage firms Jefferies and Macquarie.
Provisions Played a Key Role in Dampening Profitability
Elevated provisions for the June quarter played a key role in dampening M&M Financial’s profitability, with provisions rising 44.3% to Rs 660 crore, compared to Rs 457 crore in the previous quarter.
Brokerages’ Reaction
Jefferies maintained a ‘hold’ call on M&M Financial in the wake of its June quarter earnings, while cutting the target price to Rs 296 from Rs 306. The brokerage firm highlighted higher provisioning numbers for the April-June quarter, which led to the miss on profit numbers. Subdued disbursement growth was also a key concern for M&M Financial during the April-June period. However, Jefferies highlighted that margins did improve, and the company could stand to benefit from a potential rate cut in the second half of this calendar year.
Macquarie maintained an ‘Underperform’ rating on M&M Financial while keeping its target price of Rs 235 unchanged. Macquarie highlighted the ‘soft quarter’ for M&M Financial, pointing out that higher credit costs led to the PAT miss. Although the PAT miss was partly offset by margin improvement, the impact of higher credit costs appears to be overbearing at this point.
What Does This Mean for Investors?
Investors in M&M Financial Services Ltd. should take note of the company’s Q1 results, particularly the elevated provisions and subdued disbursement growth. While the company’s margins did improve, the impact of higher credit costs could continue to be a concern. As such, investors may want to reconsider their investment decisions or reassess their portfolio allocation.
Conclusion
In conclusion, M&M Financial Services Ltd.’s Q1 results have raised concerns among brokerages, with elevated provisions and subdued disbursement growth impacting profitability. Investors should take a closer look at the company’s performance and consider the risks and opportunities associated with investing in this NBFC.
